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HomeMy Public PortalAbout2011 and 2010 Audit Report L._ i Jefferson City Convention and Visitors Bureau Audit Report December 31, 2011 and 2010 I I Jefferson City Convention and Visitors Bureau TABLE OF CONTENTS 1 Page INDEPENDENT AUDITOR'S REPORT 1-2 I � _ MANAGEMENT'S DISCUSSION AND ANALYSIS 3-6 { BASIC FINANCIAL STATEMENTS: GOVERNMENT-WIDE FINANCIAL STATEMENTS: Ij -,� STATEMENT OF NET ASSETS 7 ! STATEMENT OF ACTIVITIES 8 FUND FINANCIAL STATEMENTS: ii - GOVERNMENTAL FUNDS: GOVERNMENTAL FUNDS BALANCE SHEET 9 GOVERNMENTAL FUNDS STATEMENT OF REVENUES, l EXPENDITURES AND CHANGES IN FUND BALANCE 10 NOTES TO THE FINANCIAL STATEMENTS 11-18 -! REQUIRED SUPPLEMENTARY INFORMATION: BUDGETARY COMPARISON SCHEDULE- GENERAL FUND 19-20 I � I Seaver & Forck, CPA's 1620 Southridge Drive,Suite A Member of Jefferson City,Missouri 65109 American Institute of ---- Certified Public Accountants Telephone 573-636-5507 Missouri Society of P Certified Public Accountants Fax 573-636-3304 INDEPENDENT AUDITOR'S REPORT To the Board of Directors of Jefferson City Convention and Visitors Bureau Jefferson City, Missouri We have audited the accompanying financial statements of the governmental activities of Jefferson City Convention and Visitors Bureau (JCCVB), component unit of City of Jefferson City, Missouri as of and for the years ended December 31, 2011 and 2010, which collectively comprise the JCCVB's basic financial statements as listed in the table of contents. These financial statements are the responsibility of JCCVB's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities of JCCVB as of December 31, 2011 and 2010, and the respective changes in financial position thereof for the years then ended in conformity with accounting principles generally accepted in the United States of America. Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and budgetary comparison information on page 3-6 and 17-18 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards I__' Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with 1 � I Independent Auditor's Report _ Page 2 , I auditing standards generally accepted in the United States of America, which consisted of inquires of management regarding the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any -- assurance. Resp ctfully submitted Seaver&Forck, CPA's November 19, 2012 I � i I 2 i , JEFFERSON CITY CONVENTION AND VISTORS BUREAU MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL STATEMENTS YEAR ENDING DECEMBER 31, 2011 Presented here is the Management Discussion and Analysis Report for the Jefferson City Ll Convention and Visitors Bureau (JCCVB) for the' year ending December 31, 2011. Responsibility for the accuracy of the data, and the completeness and fairness of this presentation (including all disclosures) rests with management. To the best of our knowledge and belief, the data contained herein is accurate in all material respects. This data is reported in a manner designed to fairly present the JCCVB's financial position and the results of operations of the JCCVB. All disclosures necessary to enable the reader to gain an accurate understanding of the JCCVB's financial activities have been included. The JCCVB's financial statements are included in the City of Jefferson City, Missouri, as a component unit of the City. The Executive Director and the Office Manager, under the direction of the Chairman of the JCCVB, are responsible for establishing an accounting and internal control structure designed to ensure that the physical data, informational, intellectual, and human resource assets of the JCCVB are protected from loss, theft, and misuse, and to ensure that adequate accounting information is maintained and reported in conformity with generally accepted accounting principles. Management also strives to ensure that these assets are put to good and effective use. The internal control structure is designed to provide reasonable assurances that these objectives - are attained. li OVERVIEW OF THE FINANCIAL STATEMENTS The financial statements presented herein include all of the activities of the JCCVB using the integrated approach as prescribed by GASB Statement 34. it This discussion and analysis is intended to serve as an introduction to the JCCVB's financial statements. The JCCVB's basic financial statements consist of. 1) government-wide financial J7 statements, 2) fund financial statements, and 3) notes to financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of our finances in a manner similar to a private-sector business. The statement of net assets presents information on all assets and liabilities, with the difference between the two reported as net assets. Over time, increases and decreases in net assets may serve as a useful indicator of whether the financial position is improving or deteriorating. The statement of activities presents information showing how the JCCVB's net assets changed during the most recent fiscal year. Revenue is recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. 3 JEFFERSON CITY CONVENTION AND VISTORS BUREAU _r MANAGEMENT'S DISCUSSION AND ANALYSIS - Continued li i Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. Fund accounting is used to ensure and demonstrate compliance with finance-related legal -� requirements. The accounts of the JCCVB are reported as governmental funds. Governmental funds. Governmental funds are used to account for essentially the same functions '— reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balance provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. FINANCIAL HIGHLIGHTS - 2011 • As of the close of the current fiscal year, the total of assets exceeded liabilities by $712,185 (i.e., net assets), an increase of$462,703 in comparison to the prior year. Of the increase, $382,341 is revenue restricted for the Conference Center Fund and $80,362 is unrestricted. i • As of the close of the current fiscal year, governmental funds reported ending unrestricted fund balances of$286,975, an increase of$91,678 in comparison with the prior year. The restricted fund balance was $382,341. There was no restricted balance in the prior year. FINANCIAL HIGHLIGHTS - 2010 � I • As of the close of the current fiscal year, the total of assets exceeded liabilities by $249,482 (i.e., net assets), a decrease of$1,463 in comparison to the prior year. • As of the close of the current fiscal year, governmental funds reported ending fund balances of$195,297, an increase of$7,898 in comparison with the prior year. GOVERNMENT-WIDE FINANCIAL ANALYSIS The following is a summary of condensed government-wide financial data for the current and -- prior year. 4 I JEFFERSON CITY CONVENTION AND VISTORS BUREAU - MANAGEMENT'S DISCUSSION AND ANALYSIS -Continued Government-Wide Financial Analysis -' Statement of Net Assets 2011 2010 Current Assets $ 287,747 $ 196,434 Non-Current Assets 382,341 - Capital Assets 42,869 54,185 '- Total Assets 712,957 250,619 j Current Liabilities 772 1,137 Total Liabilities 772 1,137 Net Assets: Invested in Capital Assets 42,869 54,185 Restricted- Convention Center 382,341 - Unrestricted 286,975 195,297 - Total Net Assets $ 712,185 $ 249,482 Statement of Activities Governmental Activities Revenues: 2011 2010 Program Revenues: Lodging Tax Revenue $ 446,383 $ 456,706 Co-op Marketing 36,252 71,373 Athletic Events 16,676 16,937 Advertising Income 1,500 1,792 Prison Tours& Promotional Items 275,905 112,314 Restricted Revenues: Lodging Tax Revenue 382,025 - 'T Interest Income 316 - General Revenues: Interest Income 432 553 Miscellaneous 6,520 1,126 Total Revenues 1,166,009 660,801 Expenses: Salaries,Payroll Taxes, and Benefits 340,946 231,949 Administrative and General 97,289 107,436 Travel 7,098 12,919 Advertising 222,695 275,275 Contracted Services(Athletic Events) 23,962 23,370 Depreciation 11,316 11,315 Total Expenses 703,306 662,264 Change in Net Assets 462,703 (1,463) Net Assets- Beginning of Year 249,482 250,945 Net Assets- End of Year $ 712,185 $ 249,482 5 JEFFERSON CITY CONVENTION AND VISTORS BUREAU !4 MANAGEMENT'S DISCUSSION AND ANALYSIS - Continued i GOVERNMENT-WIDE FINANCIAL ANALYSIS (continued) li As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. At the close of the most recent year, unrestricted revenues exceeded expenses by approximately $80,362. Actual revenues exceeded budgeted revenues, so the JCCVB took advantage of these marketing opportunities, which resulted in expenditures exceeding budget. In addition,the popularity of the prison tours resulted in the hiring of additional staff. I ! j CAPITAL ASSET ADMINISTRATION i Total investment in capital assets amounts were $42,869 and $54,185 (net of accumulated I_! depreciation) for 2011 and 2010, respectively. Therefore, there was a decrease of$11,316 from 2010 to 2011 and decrease of $9,361 from 2009 to 2010. This investment in capital assets includes furniture, equipment, and leasehold improvements. Additional information on capital assets can be found in the footnotes to the financial statements. GENERAL FUND BUDGETARY HIGHLIGHTS The executive director drafts a budget for the upcoming year. The executive director and Chairman of the Board review the budget. The budget is then submitted to the Board for approval. After the Board approves the budget, it is submitted to the City of Jefferson City, Missouri, for approval. There were no amendments to the budget for the 2011 and 2010 years. ECONOMIC FACTORS AND NEXT YEAR'S BUDGET f The JCCVB is poised for further growth and to that end is positioning itself to broaden the level of service to the Jefferson City area. At this time, management is not aware of any known facts, decisions, or conditions that are expected to have a significant effect on net assets or revenues, expenses, and other changes. The JCCVB's revenue is contingent upon the voter renewal of the lodging tax and additional funding sources and, therefore, its revenues may vary from year to year. Every effort is made on the part of the administrative staff to accurately predict revenues and expenses for the upcoming year so that staff can provide the Board with the best estimates for budgeting and planning. Factors, such as local economy, past spending patterns, past funding, and tourism growth estimates are taken into consideration to develop estimates for current and future revenues and expenses. j� REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of the JCCVB's finances for all those with interest in its financial position. Questions concerning any of the information provided in this report or requests for additional information should be addressed to the Executive Director, 100 East High Street, Jefferson City, Missouri 65102. 6 JEFFERSON CITY CONVENTION AND VISITORS BUREAU STATEMENT OF NET ASSETS DECEMBER 31, 2011 AND 2010 Governmental Activities 2011 2010 ASSETS Current Assets Cash and Cash Equivalents $ 102,253 $ 148,205 Certificate of Deposit 74,270 - Lodging Tax Receivable 49,880 48,229 Inventory 61,344 - Total Current Assets 287,747 196,434 Non-Current Assets Restricted Cash and Cash Equivalents 315,834 - Restricted Lodging Tax Receivable 66,507 - Capital Assets,Net of Accumulated Depreciation 42,869 54,185 Total Non-Current Assets 425,210 54,185 Total Assets 712,957 250,619 LIABILITIES AND NET ASSETS Other Current Liabilities 772 1,137 Total Current Liabilities 772 1,137 NET ASSETS Invested in Capital Assets,Net of Related Debt 42,869 54,185 Restricted for: Capital Projects - Convention Center 382,341 - Unrestricted 286,975 195,297 Total Net Assets $ 712,185 $ 249,482 The notes to financial statements are an integral part of these statements. 7 _I JEFFERSON CITY CONVENTION AND VISITORS BUREAU STATEMENT OF ACTIVITIES FOR THE YEARS ENDED DECEMBER 31,2011 AND 2010 Governmental Activities Net(Expense) December 31,2011 Program Revenues Revenue and Lodging Tax Charges for Operating Grants Capital Grants Change in Functions/Programs Expenses Revenue Services and Contributions and Contributions Net Assets Primary Function: Governmental Activities Personnel $ 340,946 $ 242,002 $ 98,944 $ - $ - $ General Operations 108,605 108,605 - - - - Advertising and Outreach 229,793 95,776 176,962 37,752 - 80,697 Contracted Services 2,528 - - 6,292 - 3,764 Athletic Events 21,434 - - 10,383 - (11,051) Convention Center - - - - 382,341 382,341 Total Governmental Activities 703,306 446,383 275,906 54,427 382,341 455,751 General Revenues: Investment earnings 432 Miscellaneous 6,520 Total General Revenues 6,952 Change in Net Assets 462,703 Net Assets-Beginning 249,482 Net Assets-Ending $ 712,185 Net(Expense) December 31,2010 Program Revenues Revenue and Lodging Tax Charges for Operating Grants Capital Grants Change in Functions/Programs Expenses Revenue Services and Contributions and Contributions Net Assets Primary Function: Governmental Activities Personnel $ 231,949 $ 231,949 $ - $ - $ - $ - - General Operations 118,752 116,960 1,792 - - - Advertising and Outreach 288,194 107,797 112,314 71,373 - 3,290 Contracted Services 3,000 - - 7,260 - 4,260 Athletic Events 20,370 - - 9,677 - (10,693) Total Governmental Activities 662,265 456,706 114,106 88,310 - (3,143) General Revenues: Investment earnings 553 Miscellaneous 1,127 Total General Revenues 1,680 - Change in Net Assets (1,463) Net Assets-Beginning 250,945 Net Assets-Ending $ 249,482 The notes to financial statements are an integral part of these statements. 8 I I JEFFERSON CITY CONVENTION AND VISITORS BUREAU BALANCE SHEET GOVERNMENTAL FUNDS DECEMBER 31,2011 AND 2010 Total Governmental Funds 2011 2010 Convention General Center Total Total ASSETS Cash and Cash Equivalents $ 102,253 $ 315,834 $ 418,087 $ 148,205 Certificate of Deposit 74,720 - 74,720 - Lodging Tax Receivable 49,880 66,507 116,387 48,229 Inventory 61,344 - 61,344 - Total Assets $ 288,197 $ 382,341 $ 670,538 $ 196,434 LIABILITIES AND FUND BALANCE Accounts Payable $ 772 $ - $ 772 $ 1,137 Total Liabilities 772 - 772 1,137 FUND BALANCE Reserved for: Capital Projects- Convention Center - 382,341 382,341 - Unreserved Fund Balance 286,975 - 286,975 195,297 Total Fund Balance 286,975 382,341 669,316 195,297 Total Liabilities and Fund Balance $ 287,747 $ 382,341 $ 670,088 $ 196,434 Reconciliation of fund balances on the balance sheet for governmental funds to net assets ofgovernmental activities on the statement of net assets: Fund Balances- Total Governmental Funds $ 286,975 $ 382,341 $ 669,316 $ 195,297 Amounts reported for governmental activities in the _ statement of net assets are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds. 42,869 - 42,869 54,185 Net Assets of Governmental Activities $ 329,844 $ 382,341 $ 712,185 $ 249,482 _I _ The notes to financial statements are an integral part of these statements. j 9 -- JEFFERSON CITY CONVENTION AND VISITORS BUREAU STATEMENT OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCE - GOVERNMENTAL FUNDS FOR THE YEARS ENDED DECEMBER 31,2011 AND 2010 -' Total Governmental Funds 2011 2010 Convention General Center Total Total REVENUES Lodging Tax $ 446,383 $ 382,025 $ 828,408 $ 456,706 Interest 432 316 748 553 CO-OP Marketing 36,252 - 36,252 71,373 Contracted Services 6,292 - 6,292 7,260 Fundraising-Athletic Events 10,384 - 10,384 9,677 Advertising Revenue 1,500 - 1,500 1,792 Prison Tour Revenue and Promotional Items 275,905 - 275,905 112,314 Miscellaneous 6,520 - 6,520 1,126 Total Revenue 783,668 382,341 1,166,009 660,801 EXPENDITURES -' Salaries,Payroll Taxes,and Benefits 340,946 - 340,946 231,949 Administrative and General 97,289 - 97,289 107,436 Travel 7,098 - 7,098 12,919 Marketing 222,695 - 222,695 275,275 Contracted Services(Athletic Events) 23,962 - 23,962 23,370 Capital Outlay - - - 1,954 Total Expenditures 691,990 - 691,990 652,903 I Excess of Revenues over Expenditures 91,678 382,341 474,019 7,898 Fund Balance- Beginning 195,297 - 195,297 187,399 Fund Balance- Ending $ 286,975 $ 382,341 $ 669,316 $ 195,297 Reconciliation ofthe Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities -f Net Changes in Fund Balances- Total Governmental Funds $ 91,678 $ 382,341 $ 474,019 $ 7,898 Capital outlays are reported as expenditures in the governmental funds. However,the cost of assets is allocated over their estimated useful lives and reported as depreciation expense in the statement of activities. The amounts are: Capital Outlay - - - 1,954 Depreciation Expense (11,316) - (11,316) (11,316) Loss on Disposal of Capital Outlay - - Change in Net Assets of Governmental Activities $ 80,362 $ 382,341 $ 462,703 $ (1,464) The notes to financial statements are an integral part of these statements. 10 i JEFFERSON CITY CONVENTION AND VISITORS BUREAU NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2011 AND 2010 NOTE 1 —ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES Reporting Entity - The Jefferson City Convention and Visitors Bureau (JCCVB) is a not-for-profit membership _ organization. The JCCVB was formed on April 17, 2001 as a separate entity from the Jefferson City Area Chamber of Commerce. JCCVB is a component unit of the City of Jefferson City, Missouri, and the financial information will be combined with the City of Jefferson's financial statements. The JCCVB was formed to maximize the positive economic impact of visitor dollars to the community through effectively marketing the Jefferson City area as a desirable convention and tourism destination. The governing board of the JCCVB is composed of local business owners and professionals. Government-Wide and Fund Financial Statements These financial statements have been prepared in conformity with reporting guidelines established by GASB and in conformity with generally accepted accounting principles. As a result of adopting GASB Statement No. 34, the following types of financial statements are reported by the JCCVB: Government-wide Statements—The government-wide financial statements (i.e., the statement of -- net assets and the statement of activities) report information on all of the activities of the JCCVB. Governments typically report activities as either governmental activities, which normally are supported by taxes and intergovernmental revenues, or business-type activities, which rely to a significant extent on fees and charges for support. The JCCVB reports only governmental activities as it has no business-type Ype activities. The statement of activities demonstrates the degree to which the direct expenses of a given function are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services or privileges provided by a given function, 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function, and 3) lodging tax revenue collected by the City of Jefferson and remitted to the JCCVB for its primary function. Investment earnings and other items not properly included among program revenues are reported instead as general revenues. Since the JCCVB's primary function (mission) is promoting and cultivating tourism in the, City of Jefferson, all revenues and expenses are considered to be for this purpose and the accompanying financial statements do not segregate beyond this function. Fund Financial Statements — Separate financial statements are provided for the JCCVB's Governmental Funds, as described below: 11 ; i u JEFFERSON CITY CONVENTION AND VISITORS BUREAU _ NOTES TO FINANCIAL STATEMENTS !� DECEMBER 31, 2011 AND 2010 NOTE 1 - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES (continued) Governmental Fund Type —used to account for all operations of the JCCVB. The measurement . focus of this fund type is based upon determination of changes in financial position or the financial flow measurement focus, rather than upon net income determination. Only current assets and current liabilities are generally included on its balance sheet. The operating statement -- presents sources (revenues and other financial sources) and uses (expenditures and other financial uses) of available spendable resources during the period. The following comprise the JCCVB's major governmental funds: General Fund—used to account for all financial resources except those required to be accounted for in another fund. This fund is established to account for resources devoted to financing the general services that JCCVB performs. Governmental funds are reported in the fund statements with a short-term, inflow and overflow of spendable resources focus. This information is useful in assessing resources available at the end of the year in comparison with upcoming financing requirements. Governmental funds reported ending fund balances of$669,316 and $195,297 for December 31, 2011 and 2010, respectively. Of this year-end total, $382,341 is restricted for the Conference Center and $286,975 is unreserved indicating availability for continuing JCCVB service requirements. The 2010 fund balance was all unrestricted. ; i Measurement Focus, Basis of Accounting and Financial Statement Presentation I Basis of accounting refers to the point at which revenues and expenditures or expenses are - recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus applied. l — Government-Wide Financial Statements — The government-wide financial statements are f reported using the current financial resources measurement focus and the accrual basis of accounting. Revenues are recognized when earned and expenses are recorded when a liability is -- incurred, regardless of the timing of related cash flows. Revenues are considered to be available { I when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. - Governmental Fund Financial Statements—Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. Expenditures are generally recorded when a liability is incurred, as under accrual accounting. However, expenditures relating to compensated absences are recorded only when payment is due. - 12 JEFFERSON CITY CONVENTION AND VISITORS BUREAU _ NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2011 AND 2010 NOTE I - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES (continued) Assets, Liabilities, and Net Assets or Equity Cash and Cash Equivalents Cash and cash equivalents include amounts in demand deposit accounts held at local financial institutions. At December 31, 201 land 2010 cash and cash equivalents include the following: 2011 2010 Checking and Money Market accounts,unrestricted $ 102,253 $ 148,205 Convention Center, Money Market account, restricted 315,834 0 Investments Investments are composed of a certificate of deposit with an original maturity of greater than three months. When excess funds are available for investment the JCCVB will adhere to state law and the City of Jefferson City's investment policy. Receivables All receivables are reported at the value collected by the City of Jefferson, but not yet submitted to the JCCVB. Management has determined the receivables are collectible as of the year end. Receivables are separated between current and non-current. Inventories Inventories include souvenirs sold in the prison tour gift shop. Inventories are recorded at cost and consist of books, t-shirts, keys, and other miscellaneous items. Capital Assets Capital assets include property, equipment, and improvements that are recorded as expenditures in the Governmental Fund and capitalized at cost in the government-wide financial statements for items exceeding $500. Depreciation has been provided over the following estimated useful lives of the respective assets on the straight-line method. Equipment 5 years Furniture 7 years Improvements 15 years Compensated Absences Employees are allowed to accumulate and carry one week of vacation to the next year. At December 31, 2011 and 2010, the amount accrued for compensated absences was considered to be immaterial and not recorded. 13 JEFFERSON CITY CONVENTION AND VISITORS BUREAU NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2011 AND 2010 NOTE 1 - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES (continued) Net Assets In 2011, the JCCVB received lodging tax revenues from the City of Jefferson that are restricted for the Conference Center Fund. These revenues are generated from a 4% lodging tax increase and are restricted for building a Conference Center. JCCVB maintains a separate bank account for the funds. All other monies received are unrestricted. Therefore, at this time there is no formal policy regarding whether to first apply restricted or unrestricted resources when an expense is incurred for purposes for which both restricted and unrestricted net assets are available. Reclassification Certain prior year amounts have been reclassified to conform to the current year report. Accounting Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of _ the financial statements and the amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates. Cost Allocation Expenses incurred in relation to specific grants or contracts are charged directly to grants or contracts. All other expenses are charged to the general fund and allocated to active grants or contracts on the basis of direct salary charges to total direct salaries, plus allocated fringe benefits. This policy is consistent with the principles of Office of Management and Budget ("OMB") Circular A-87. Income Taxes The Jefferson City Convention and Visitors Bureau is a not-for-profit corporation exempt from income tax under the U.S. Internal Revenue Code Section 501(c)(6). The corporation has been classified as an organization that is not a private foundation under Section 509(a)(2). The Form 990 and taxable status of the Organization are subject to examination by the Internal Revenue Service for open tax years, which as of the date of this report are the years 2008 through 2011. Encumbrances The JCVB does not utilize encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation. 14 JEFFERSON CITY CONVENTION AND VISITORS BUREAU NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2011 AND 2010 NOTE 2—BUDGET POLICY The budget is legally adopted by the JCCVB's Board. Upon board approval the budget is submitted to the City of Jefferson for approval. The budget is prepared based on the modified accrual basis of accounting. All budget amounts presented in the Budgetary Comparison Schedule have been adjusted for budget revisions approved by the JCCVB's Board. Appropriations lapse at the end of each year. The adopted budgets are used as a management control device during the year. NOTE 3—RISK MANAGEMENT It is the policy of the JCCVB to purchase insurance for the risks of losses related to torts; theft of, damage to, and destruction of assets; errors and omission; injuries to employees; and natural disasters. The JCCVB obtained workers' compensation, property, general liability, and directors and officers insurance coverage. NOTE 4—RETIREMENT PLAN For 2010, the employees of the JCCVB participated in the American Chamber of Commerce Executives Retirement Plan. The Board decided to discontinue employer contributions as of March 1, 2003, but beginning January 1, 2005, the JCCVB will match up to 5% of employee contributions. In this multiple-employer plan available to all member Chambers of Commerce, the accumulated benefits and plan assets are not determined or allocated separately by individual employer. Employees with one year of service are eligible to participate. The total contributions made by the JCCVB for the time period ending December 31, 2010 were $6,924. For 2011, the JCCVB maintained a SIMPLE IRA plan for eligible employees. Employees who earned at least $5,000 per year during any two preceding years and who are expected to earn at least $5,000 in the current year are eligible to participate in the plan. The JCCVB will match up to 3% of employee contributions. The total contributions made by the JCCVB for the year ended December 31, 2011 was $4,391. NOTE 5—CONCENTRATION OF REVENUE The City of Jefferson City, Missouri receives lodging tax from local hotels on rooms they have rented for overnight stays. The City of Jefferson City collects the lodging tax and remits it to the JCCVB to promote and cultivate tourism in the Jefferson City area. The unrestricted lodging tax revenue was 56% and 69% of revenues for the JCCVB in 2011 and 2010, respectively. NOTE 6—ACCOUNTS RECEIVABLE Accounts receivable consist of the following at December 31, 2011 and 2010: November and December Lodging Tax Collected 2011 2010 Unrestricted $ 495880 $ 48,229 Restricted 66,507 - 15 JEFFERSON CITY CONVENTION AND VISITORS BUREAU NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2011 AND 2010 NOTE 7—CAPITAL ASSETS The JCCVB's investment in capital assets, for governmental activities as of December 31, 2011 and 2010 was $42,869 and $54,185,respectively. Capital asset activity for the year ended December 31, 2011 was as follows: Capital assets being depreciated: January 1 Additions Deletions December 31 Building Improvements $ 28,677 $ - $ - $ 28,677 Furniture and Equipment 63,090 - - 63,090 Total capital assets being depreciated 91,767 - - 91,767 Less accumulated depreciation for: Building Improvements 6,456 1,913 - 8,369 Furniture and Equipment 31,126 9,403 - 40,529 Total accumulated depreciation 37,582 11,316 - 48,898 J— Total capital assets being depreciated, net 54,185 (11,316) - 42,869 i, Governmental Activities Capital Assets, net $ 54,185 $ (11,316) $ - $ 42,869 I_ Depreciation Expense. Depreciation expense was charged to governmental activities' functions as follows: 2011 2010 General Operations $ 11,316 $ 11,316 I { NOTE 8—CONCENTRATION OF CREDIT RISK Financial instruments that potentially subject the JCCVB to concentration of credit risk consist primarily of cash. The JCCVB places its cash with credit worthy high-quality financial institutions. The account holder is secured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. During the normal course of business, the JCCVB's balance may exceed the insured amounts; however, the JCCVB has not sustained any losses due to the credit risk and management does not feel there is exposure to the same. The uninsured balances were $172,826 and $0 at December 31, 2011 and 2010, respectively. The uninsured balances do not consider deposits in transit or uncleared checks. 16 J i JEFFERSON CITY CONVENTION AND VISITORS BUREAU NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2011 AND 2010 NOTE 9—OPERATING LEASE COMMITMENTS The JCCVB entered into a new lease August 1, 2011, for office space. The lease begins August : 1, 2011 and ends July 31, 2016. The JCCVB has the option to extend the term for five additional one-year terms, except that, in the event JCCVB's contract with the City of Jefferson is terminated, the lease shall be terminable by JCCVB upon ninety days notice to Lessor. Monthly rent expense is $3,000. Rent expense was $30,600 and $25,200 for 2011 and 2010 respectively. The JCCVB pays rent, utilities, property liability and casualty insurance, and maintenance expenses on the leased office but does not pay property taxes. The future minimum lease payments for this lease are: U 2012 $ 36,000 2013 39,600 2014 39,600 2015 39,600 2016 23,100 $ 177,900 The JCCVB also leases a copy machine. The lease is a 36 month lease, ending in June 30, 2014. Monthly base expense is $182.09. Lease expense was $2,299 and $2,067 for 2011 and 2010, respectively. The future minimum lease payments for this lease are: 2012 $ 2,185 2013 2,185 2014 1,093 $ 5,463 NOTE 10—DISCOVER JEFFERSON CITY FOUNDATION Discover Jefferson City is a separate entity with its own Board on Directors. It was established as a 501(c)(3) organization and will receive donations on behalf of the JCCVB. The JCCVB is the only entity that will receive donations from the Foundation. The JCCVB received reimbursements totaling $119,459 for payroll expenses and other expenses incurred related to the prison tours. NOTE 11 —RESTRICTED FUND BALANCE An ordinance of the City of Jefferson City authorized the city to contract with the JCCVB, regarding the procedures of lodging tax. Voters passed a 4% lodging tax increase to be used for the purpose of construction of a Conference Center and parking facilities. The City of Jefferson will collect the lodging tax and remit to the JCCVB to hold until construction begins. As of December 31, 2011 and 2010, the restricted find balance is $382,341 and $0, respectively. 17 JEFFERSON CITY CONVENTION AND VISITORS BUREAU NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2011 AND 2010 NOTE 12—CHANGE IN ACCOUNTING PRINCIPLE JCCVB changed from the modified cash basis of accounting to the accrual basis of accounting. Under the modified cash basis, JCCVB was recording receivables and payroll tax liabilities. Changing to the accrual basis included recording operating payables and prepaid expenses. The cumulative effect on the financial statements was not material; therefore, net assets were not restated. NOTE 13—EVALUATION OF SUBSEQUENT EVENTS Management has evaluated subsequent events through November 19, 2012, which is the date the financial statements were available to be issued. I ' I LJ I I LJ I II 18 JEFFERSON CITY CONVENTION AND VISITORS BUREAU REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE GENERAL FUND FOR THE YEAR ENDED DECEMBER 31, 2011 Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES (Unrestricted) Lodging Tax $ 444,900 $ 444,900 $ 446,383 $ 1,483 Interest 573 573 432 (141) Miscellaneous 350 350 6,520 6,170 Advertising Income 2,200 2,200 1,500 (700) Contracted Services 7,600 7,600 6,292 (1,308) CO-OP Marketing 28,369 28,369 36,252 7,883 Fundraising-Athletic Events 8,500 8,500 10,384 1,884 Prison Tour Revenue and Promotional Items 121,800 121,800 275,905 154,105 Surplus to be Transferred 37,609 37,609 37,024 (585) Total Revenue 651,901 651,901 820,692 168,791 -- EXPENDITURES Salaries,Payroll Taxes, and Benefits 307,174 307,174 340,946 (33,772) Administrative and General 119,380 119,380 108,605 10,775 Travel 12,800 12,800 7,098 5,702 Marketing 208,947 208,947 222,695 (13,748) Contracted Services(Athletic Events) 2,600 2,600 23,962 (21,362) Capital Outlay 1,000 1,000 - 1,000 Total Expenditures 651,901 651,901 703,306 (51,405) Excess of Revenues over Expenditures - - 117,386 117,386 Fund Balance- Beginning 202,182 202,182 275,741 73,559 Fund Balance- Ending $ 202,182 $ 202,182 $ 393,127 $ 190,945 The notes to financial statements are an integral part of these statements. 19 � f JEFFERSON CITY CONVENTION AND VISITORS BUREAU NOTES TO REQUIRED SUPPLEMENTARY INFORMATION DECEMBER 31, 2011 Budgetary Information The executive director is responsible for preparing the annual operating budget for the JCCVB Board of Director's review and approval and the Council of the City of Jefferson City, Missouri's review and approval. The executive director's proposed budget can only be adopted by majority action of the JCCVB's Board of Directors and of the City of Jefferson's Council. Controls are maintained to ensure compliance with the annual adopted budget. Budgets are prepared on the modified accrual basis of accounting, which is consistent with the basis used for financial reporting. The budget amounts shown in the financial statements are the original and final authorized amounts. The budget was not amended during the 2011 and 2010 years. Excess of Expenditures over Appropriations For the year ending December 31, expenditures exceeded appropriations in the following areas - within the general fund: Salaries, Payroll Taxes, and Benefits $ 33,772 -- Marketing 13,748 Contracted Services 21,362 i The expenditures were funded by revenues that were in excess of budgeted revenues and by !` available fund balance. Reconciliation of budgetary information to the modified accrual basis financial statements Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) Fund Balance-Ending $ 202,182 $ 202,182 $ 329,844 $ 127,662 Surplus to be Transferred-transfer from savings (37,609) (37,609) - 37,609 Capital Outlay 1,000 1,000 - (1,000) Net Assets $ 165,573 $ 165,573 $ 329,844 $ 164,271 I 20 Seaver and Forek, CPA's 1620 Southridge Drive,Suite A Member of Jefferson City,Missouri 65109 American Institute of Certified Public Accountants of Telephone 573-636-5507 Missouri Society P Certified Public Accountants Fax 573-636-3304 COMMUNICATION OF AUDIT RESULTS To the Board of Directors and Management of Jefferson City Convention and Visitors Bureau We have audited the financial statements of the governmental activities of Jefferson City Convention and Visitors Bureau for the year ended December 31, 2011. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated September 19, 2011. Professional standards also require that we communicate to you the following information related to our audit. Significant Audit Findings Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by Jefferson City Convention and Visitors Bureau are described in Note 1 to the financial statements.No new accounting policies were adopted and the application of existing policies was not changed during 2011. We noted no transactions entered into by the governmental unit during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimate affecting the financial statements was: Management's estimate of depreciation expense is based on the estimated useful life of assets. We evaluated the key factors and assumptions used to develop the estimate of depreciation expense in determining that it is reasonable in relation to the financial statements taken as a whole. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Communication of Audit Results Page 2 Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. Management recorded a $61,344 adjustment to record prison tour souvenir shop inventory at December 31, 2011. This entry was material, both individually and in the aggregate, to the financial statements take as a whole. Uncorrected misstatements included recording additional accounts payable, prepaid expense, and reclassifying furniture and computer purchases. The net effect would have been approximately a $5,200 net increase in fund balance. Management has determined their effects are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. Disagreements with Management For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be,significant to the financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from management that are included in the management representation letter dated November 19, 2012. Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the governmental unit's financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the governmental unit's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Other Matters With respect to the supplementary information accompanying the financial statements, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the J Communication of Audit Results Page 3 prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. During our audit, we became aware of matters that are opportunities for strengthening internal controls and operating efficiency. This letter does not affect our report dated November 19, 2012, on the financial statements of Jefferson City Convention and Visitors Bureau. Our comments are summarized as follows: Organizational Structure The size of the Bureau's accounting and administrative staff precludes certain internal controls that would be preferred if the office staff were large enough to provide optimum segregation of duties. This situation dictates that-the Board of Directors remains involved in the financial affairs of the Bureau to provide oversight and independent review functions. Inventory Jefferson City Convention and Visitors Bureau operates a souvenir shop where it sells books, t-shirts, keys, and other miscellaneous items related to the Missouri State Penitentiary. In order to keep merchandise reasonably priced some items, like the books and t-shirts, are purchased in bulk. At December 31, 2011 approximately $61,000 in merchandise was included in promotional expenses, instead of inventory. In order to accurately reflect the souvenir shop revenues and expenses in the financial statements, the inventory should be recorded and adjusted to record expenses in the same period as the related sales. Conference Center Bank Account A new bank account was opened to maintain the restricted lodging tax collected by Jefferson City for the construction of the Convention Center. At December 31, 2011 the balance of this account exceeded the Federal Deposit Insurance Corporation amount of $250,000 and will continue to grow as lodging tax revenues are collected. The Board may investigate this issue to ensure the exposure to loss is minimal. The information is intended solely for the use of the Board of Directors and management of Jefferson City Convention and Visitors Bureau and the City of Jefferson City and is not intended to be and should not be used by anyone other than these specified parties. Very truly yours, 4_4&wA, rapms Seaver and Forck, CPA's November 19, 2012